Which of the following is a key assumption leading to the Monetarist view that government deficits crowd out private investment?

Question

Quizplus · Accepted Answer

The Monetarist view assumes that investment is sensitive to the interest rate, meaning that lower interest rates increase private investment and higher interest rates decrease private investment. Therefore, if the government runs deficits and borrows money, it increases demand for loanable funds and drives up interest rates, which in turn leads to a decrease in private investment.

Which of the Following Is a Key Assumption Leading to the Monetarist